On 31 March 2020, ASIC and the ASX announced temporary capital raising relief measures to assist ASX-listed entities affected by the COVID-19 pandemic to undertake emergency capital raisings.  Click here for our previous article summarising these relief measures.

On 22 April 2020, the ASX updated its relief measures to clarify certain matters and to improve the overall operation of the relief measures.  These updates took effect from 23 April 2020 and the key updates are summarised below:

Prior notification to ASX

• Before a listed entity can take advantage of the ASX temporary emergency capital raising relief measures, it must give a written notice to the ASX (not for release to the market) of its intention to do so and explain the circumstances in which it will utilise the relief measures. 
• The “circumstances” to be notified to the ASX in the notice include whether the capital raising is proposed to be made to raise urgently needed capital to address issues arising in relation to the COVID-19 health crisis and/or its economic impact, or for some other purpose.

Changes to the increased placement capacity relief

Follow on standard rights issues now allowed

Listed entities seeking to utilise the increased placement capacity under listing rule 7.1 are now allowed to undertake the placement, followed by a standard or accelerated rights issue, or, followed by an issue to existing security holders under a security purchase plan.  Previously, only an accelerated rights issue had been contemplated by the ASX.  This change is intended to benefit smaller listed entities that do not have a substantial base of institutional security holders and therefore get no benefit from undertaking an accelerated rights issue to institutional security holders.

Follow on security purchase plans

The following updates will be relevant for listed entities utilising the increased placement capacity under listing rule 7.1 in a placement that is to be followed by an issue to existing security holders under a security purchase plan (SPP):

• If there is a limit on the amount to be raised under an SPP offer, the entity must:
• use all reasonable endeavours to ensure that SPP offer participants have a reasonable opportunity to participate equitably in the overall capital raising; and
• disclose why a limit is in place and how the limit was determined in relation to the total proposed fundraising;
• An entity that has the benefit of a waiver or exemption from ASIC to allow it to make SPP offers of more than $30,000 to individual holders under ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547 in any 12 month period, is regarded as satisfying the conditions in that instrument;
• Any scale-back arrangements for SPP offers must be applied on a pro rata basis to all participants, and the scale-back must be based either on the size of their existing security holdings or the number of securities they have applied for; and
• ASX has granted a waiver in relation to exception 4 of listing rule 10.12, to allow parties covered by listing rule 10.11 (including directors) to participate in an SPP offer on the same terms as other security holders.

Additional disclosures by listed entities

• Within 5 business days of a listed entity completing a placement utilising the increased placement capacity under listing rule 7.1, the entity must announce to the market:
• the results of the placement;
• reasonable details about the approach the entity took in identifying investors to participate in the placement and how it determined their respective allocations in the placement (including the key objectives and criteria that the entity adopted in the allocation process, whether one of those objectives was a best effort to allocate pro-rata to existing holders and any significant exceptions or deviations from those objectives and criteria); and
• that, as far as it is aware, no securities were issued to or agreed to be issued in the placement to any person referred to in listing rule 10.11 without one of the following applying:
• the issue or agreement was approved by, or is conditional upon the approval of, security holders in accordance with listing rule 10.11;
• the issue or agreement was made in accordance with an exception in listing rule 10.12; and
• the issue or agreement was made in accordance with a waiver granted by ASX from listing rule 10.11.
• Within 5 business days of a listed entity completing a placement utilising the increased placement capacity under listing rule 7.1, the entity must give ASIC and ASX (but not for release to the market) a detailed allocation spreadsheet in electronic format showing:
• full details of the persons to whom securities were allocated in the placement (including their name, existing holding as understood by the entity, the number of securities they applied for at or above the final price or were offered in the placement); and
• the number of securities they were allocated in the placement (including any zero allocations).

Back-to-back trading halts

ASX has clarified that:

• It will permit a listed entity contemplating any form of capital raising to request two consecutive trading halts.  Previously this facility was only available to listed entities announcing their intention to undertake an accelerated rights issue;
• A listed entity seeking two consecutive trading halts must make that fact clear in its request for a trading halt and it must also state in that request that the consecutive trading halts are for the purpose of considering, planning and executing a capital raising.  Consecutive trading halts are not permitted for any other purpose;
• If a listed entity simply requests a trading halt, ASX will only grant it a single trading halt for a maximum of up to two trading days.  ASX will not entertain a subsequent application from the entity for a second consecutive trading halt.

Clarification of the withdrawal of ASX relief measures

• ASX can withdraw its temporary emergency capital raising relief measures for all listed entities prior to the scheduled expiry date of 31 July 2020, by a market notice to that effect.
• ASX can also withdraw its temporary emergency capital raising relief measures in respect of an individual listed entity, by giving that entity written notice to that effect.

Full details of the 22 April 2020 updates by the ASX to its temporary emergency capital raising relief measures can be found here.